The Great Crunch: IT's Role in Healthcare Consolidation

By: Josh Mayfield | 10/25/2018

I don’t possess the requisite wisdom and foresight of someone like Toby Cosgrove, MD and CEO of Cleveland Clinic, who predicts that by the year 2050, there will only be 50 healthcare providers in the United States. Still, when you scan the headlines, you can’t help but see a seemingly unending parade of mergers and acquisitions. Why?

For starters, during the 1980s there was an explosion of group benefits catering to the fee-for-service model. Health Management Organization (HMO) plans started to lose market position to Preferred Provider Organization (PPO) plans in the competition for wallet-share and as such, offered a wide range of reimbursable treatments without the need for referrals for specialists. Naturally, this led to an expanding empire of services, ancillary care facilities, instant elective surgeries, a reduced number of primary care providers, and strategically placed hospitals to rope in the greatest number of patients.

Then, we started to look at outcomes. Though there was an increase in patient choice and preferences taking priority of place, the ratio of spending-to-outcomes was dangerously out of balance. Whenever any supply chain (health services included) is fragmented to deliver a service to widespread consumption points, costs rise. The rationalizations for more services by more providers in more places started to show cracks, and now, cost-conscious healthcare providers are joining forces to keep the options consumers crave while removing the enormous expense of satisfying those cravings alone.

For years, IT asset managers have been an afterthought with little recognition for their contributions to deliver care or revolutionize healthcare’s digital transformation. In this evolving landscape, that’s no longer the case. When healthcare providers come together in (somewhat) holy matrimony, IT teams walk to the center of the stage to make sure the marriage is a happy and successful one. Of course, you may find yourself on either of two sides: you could be the health system absorbing a collection of clinics and hospitals or you could be the one getting pulled into the conglomerate. Either way, the stage light is beaming at IT asset managers to make the relationship work.

Let’s look at the role IT asset managers play in healthcare consolidation from both sides.

The Seller

IT asset managers sit at the syphon hose of asset intelligence to identify waste, consolidate technology, streamline workflows, and control the lifecycle from factory to recycling truck. Here, you have the opportunity to shine the apple and create even more value for potential suitors. Before the due diligence, you are impacting the income statement (P&L) to rein in expenses and magnify the effectiveness of the organization’s technology spend: you’re literally changing the bottom line.

This contribution to a successful sell cannot go unacknowledged. IT spending accounts for 8-10% of total spending within a healthcare organization; the same organizations who regularly have a 2-3% surplus (profit margins). By carefully and deliberately cutting costs, removing waste, and increasing IT efficiency, you have positioned your organization to command favorable terms and the freedom to holdout for the best offer from anyone wishing to get their hands on the goods.

The Buyer

With another acquisition, IT asset managers have another golden opportunity to stand out and demonstrate their ability to make the acquisition simple and easy. How? With asset intelligence.

Take a seat above it all, identify all the new devices and start the interrogation. You’ll soon discover wasteful inefficiencies, misaligned resources and users, woefully unprotected PHI, and a cohort of endpoints dangerously unhygienic. These assets are now your assets and they need your care and protection. For example, two years ago, you implemented a system to monitor every device, user, app, and data particle with the benchmarks of CIS, HITRUST, and internally calibrated standards. You therefore have a digital tethering technique to hook to any device and never let it out of your sight, allowing you real-time knowledge of the device fleet and the ability to command each one of them from central control.

By removing the sludge and the risks imposed by these additional assets, you’ve rationalized the purchase…and you don’t even work in finance. You don’t calculate net-present values or perform the value at-risk models of those Wall Street types. You’re simply doing what every highly skilled asset manager does; you remove the trouble spots before a costly reckoning crushes the grand plans of those who make plans.

The Value of IT

It has been said that IT is the forgotten piece of healthcare, that is, until there’s a problem. But when it comes to the mass consolidation happening all around us, we can see that there has never been a better opportunity to shatter this myth. Whether you find yourself looking at healthcare’s crunch from the seller’s or buyer’s perch, you have a chance to demonstrate just how important IT asset managers are to success. As a seller, you give the organization confidence that everything has been counted, assessed, streamlined, and positioned to attract only the best.  As a buyer, you weave together previously unfamiliar and separate inventories, apps, users, and machines to enable continuity of care and airtight security.

In such a moment, is there any doubt that IT asset managers are the heroes in this story? No one else has the deep understanding of assets and their interactions; of users and their needs; of historical events and the future’s requirements. If you want to see a lucrative exit or courageous acquisition, then recognize the IT asset managers who make it possible.

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